In January 2017, both Chinese exports and imports rose substantially on a year earlier for the first time in more than two years. No grounds for euphoria but at least for cautious optimism.

Allianz SE
Munich, Feb 10, 2017

At the start of the year Chinese exports were up 7.9% on a year earlier. With an increase of 16.7%, imports were up even more strongly. When assessing these at first glance encouraging figures, two aspects should be borne in mind. For one thing, the figures for January and February are always somewhat distorted by the shifting Chinese New Year Festival from year to year. Secondly, the increase in both imports and exports is likely to have been to a large part determined by price effects. This is indicated by foreign trade prices for December when export prices rose by 2.1% and import prices by 8.1%. For imports in particular, the trend towards further rising prices (especially energy) is likely to have continued in January.

Stripping out price effects, foreign trade is likely to have recorded moderate real growth in January. On the one hand, there are grounds for cautious optimism with regard to domestic demand growth in China this year. On the other, the increase in exports shores up our impression that world trade shifted up a gear at the turn of the year 2016/2017. The results of the latest Caixin survey of purchasing managers in the manufacturing sector, who were especially upbeat about export orders, also chime with this.